GMS Week 31 – PAUSE BREAKS, PASSAGE OPENS

The week began with a ceasefire agreement between the United States and Iran, but the peace did not last. On Monday, President Trump announced that the US had paused its strikes in response to Iran’s request, but warned that attacks would resume without a new deal. By Wednesday, Iran had retaliated against American assets across the region, prompting a series of strikes from Washington on dozens of Iranian military targets.

By Thursday, the two nations were engaged in a tit-for-tat exchange of missile barrages, while Saudi Arabia joined in, attacking Iranian-backed proxies directly. The ceasefire announcement, which was initially welcomed, quickly faded away by Wednesday, only to be replaced by a new weekly publication schedule for pauses.

Despite the ceasefire, oil prices experienced a notable decline throughout the week. Brent crude fell from USD 97.63 to around USD 87, while WTI decreased to USD 83.78, marking a roughly 11% drop for the week. Even though crude prices surged by 6.6% during Wednesday’s escalation, they remained more than 20% higher on the month. The drop in oil prices was largely attributed to the reduced activity in the Hormuz Strait, where 14 commodity vessels transited compared to single-digit numbers a week earlier.

Qatar successfully pushed its first liquefied natural gas (LNG) cargo through the strait, and Saudi Arabia convened representatives from 43 countries to discuss measures to protect the vital sea lanes. However, the increased activity in the Hormuz Strait was overshadowed by ongoing tanker attacks and the unresolved threat in the Bab al-Mandab region.

The Baltic Dry Index fell to a four-week low of 2,632 on Wednesday before recovering slightly to 2,673 on Thursday, while the Capesize and Panamax indices showed modest gains. The market’s focus on dry bulk shipping showed signs of recovery, but the gains were short-lived.

Currency markets also experienced mixed sentiment during the week. The Indian rupee (INR) strengthened sharply against the US dollar (USD), reaching near 95.65 as oil prices retreated. The Pakistani rupee (PKR) settled near 278.25, showing little change from its previous levels. The Turkish lira (TRY) also experienced volatility, with fresh records set near 47.51.

Bangladesh signaled a gradual recovery from the July 29 to August 1 flood disaster, with floodwaters receding and the beach opening for the first time since the rains began. The first meaningful beachings in Chattogram occurred during this period, signaling a potential return to activity. In the recycling market, the Stolt Kikyo chemical tanker was sold at USD 455 per LDT, marking the first basin sale in a month.

Additionally, discussions were initiated regarding the inclusion of two Alang facilities on the EU List, which could potentially provide a direct channel for EU-flagged recycling candidates into India. The week’s events illustrated the complex interplay between geopolitical tensions, commodity markets, and regional developments as the Gulf of Mexico and Strait of Hormuz continue to shape global dynamics.